Correlation Between Packagingof America and BROOKFIELD CORP
Can any of the company-specific risk be diversified away by investing in both Packagingof America and BROOKFIELD CORP at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Packagingof America and BROOKFIELD CORP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Packaging of and BROOKFIELD P CLA, you can compare the effects of market volatilities on Packagingof America and BROOKFIELD CORP and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Packagingof America with a short position of BROOKFIELD CORP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Packagingof America and BROOKFIELD CORP.
Diversification Opportunities for Packagingof America and BROOKFIELD CORP
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Packagingof and BROOKFIELD is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Packaging of and BROOKFIELD P CLA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BROOKFIELD P CLA and Packagingof America is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Packaging of are associated (or correlated) with BROOKFIELD CORP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BROOKFIELD P CLA has no effect on the direction of Packagingof America i.e., Packagingof America and BROOKFIELD CORP go up and down completely randomly.
Pair Corralation between Packagingof America and BROOKFIELD CORP
Assuming the 90 days horizon Packagingof America is expected to generate 1.86 times less return on investment than BROOKFIELD CORP. But when comparing it to its historical volatility, Packaging of is 1.76 times less risky than BROOKFIELD CORP. It trades about 0.29 of its potential returns per unit of risk. BROOKFIELD P CLA is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest 4,930 in BROOKFIELD P CLA on September 4, 2024 and sell it today you would earn a total of 950.00 from holding BROOKFIELD P CLA or generate 19.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Packaging of vs. BROOKFIELD P CLA
Performance |
| Timeline |
| Packagingof America |
| BROOKFIELD P CLA |
Packagingof America and BROOKFIELD CORP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Packagingof America and BROOKFIELD CORP
The main advantage of trading using opposite Packagingof America and BROOKFIELD CORP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Packagingof America position performs unexpectedly, BROOKFIELD CORP can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in BROOKFIELD CORP will offset losses from the drop in BROOKFIELD CORP's long position.| Packagingof America vs. AptarGroup | Packagingof America vs. Superior Plus Corp | Packagingof America vs. NMI Holdings | Packagingof America vs. Origin Agritech |
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Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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